Qualcomm shares soar on CEO comments about China, large customer
Qualcomm shares staged a dramatic comeback after the bell on Wednesday, as CEO Cristiano Amon said in its earnings call that it would begin shipping data center chips to a “major hyperscaler” within the calendar year.
The stock initially fell as much as 7% after the chipmaker reported second-quarter earnings that beat Wall Street forecasts but fell short of future forecasts.
Amon did not disclose the customer but said more details would come at Qualcomm’s investor day in June.
Although it remains largely behind the giants Nvidia In the race for chips to power artificial intelligence, Qualcomm announced its own data center chips last year. OpenAI also announced last week a partnership with Qualcomm to develop an AI chip for smartphones that could power an OpenAI device that would be run by AI agents.
“We are in a period of profound industry transformation; the rise of AI agents is reshaping our roadmap across every platform we develop,” Amon said on the earnings call.
The U.S. chipmaker reported adjusted earnings per share of $2.65, beating estimates by nine cents. Revenue was in line with expectations at $10.6 billion, but the third-quarter revenue forecast fell short of expectations.
Qualcomm expects third-quarter revenue to be in the range of $9.2 billion to $10 billion; That falls short of the $10.19 billion StreetAccount analysts were looking for.
This year saw a surge in memory prices that hit Qualcomm’s consumer electronics end market. Gartner predicts that PC prices will rise 17% this year and shipments will fall 10.4%. According to International Data Corporation, global smartphone shipments fell more than 4%, breaking an upward trend that has continued since mid-2023.
When it comes to smartphone sales in China, Amon said in a conversation with CNBC that this quarter will be the lowest due to “customers running out of stock.”
The bulk of Qualcomm’s revenue comes from licensing fees it charges for its core technology used in nearly every smartphone. Amon told CNBC that this part of his business “allows us to know exactly how much stuff is in the end market.”
Qualcomm designs chips and wireless technologies for smartphones, personal computers, cars and other devices. It is best known for the Snapdragon processors that power Android phones and modem technology that enables mobile connectivity such as 5G.
Amon told CNBC that the memory shortage hasn’t affected data center chip shipments this year, adding that Qualcomm is a new entrant into this space, so its “scale is probably not the same as established providers.”
Qualcomm’s automotive segment posted a record 38% year-on-year increase as Amon said it was “beginning to scale” its processors that power autonomous driving.
In smartphones, Qualcomm has lost a major customer. Apple It began replacing modems in iPhones with its own in-house chips starting in 2025.
Now OpenAI may be poised to become Qualcomm’s next big smartphone customer if CEO Sam Altman follows through on his plan to develop an AI device within two years.
“You have to consider that we work with not only them, but most of the AI companies today,” Amon told CNBC. “So the design involvement is very solid.”
CNBC’s Kristina Partsinevelos contributed to this report.
